A particular security’s rate of return is 6 percent. For all securities, the inflation risk premium is 1.27 percent and the real risk-free rate is 1.09 percent. If the security’s liquidity risk premium is 0.91 percent, its defaul risk premium is 0.60 percent and has no special covenants, what is the security’s maturity risk premium.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter6: Fixed-income Securities: Characteristics And Valuation
Section: Chapter Questions
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A particular security’s rate of return is 6 percent. For all securities, the inflation risk premium is 1.27 percent and the real risk-free rate is 1.09 percent. If the security’s liquidity risk premium is 0.91 percent, its defaul risk premium is 0.60 percent and has no special covenants, what is the security’s maturity risk premium.

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